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AIRPORTS AUTHORITY OF INDIA vs MUMBAI INTERNATIONAL AIRPORT LIMITED & ANR.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
RESERVED ON – 23.01.2025.
% PRONOUNCED ON – 07.03.2025.
+ O.M.P. (COMM) 185/2024
AIRPORTS AUTHORITY OF INDIA …..Petitioner
Through: Mr. Tushar Mehta, Learned SGI with Mr. Karan Lahiri, Mr. Prateek Arora, Ms. Rishieka Ray, Advs.

versus

MUMBAI INTERNATIONAL
AIRPORT LIMITED & ANR. …..Respondents
Through: Mr. Rajiv Nayar, Sr. Adv with Ms. Niyati Kohli, Mr. Mahesh Agarwal, Mr. Rishi Agrawal, Mr. Pratham Vir Agarwal, Mr. Sanjeev Sheshadri, Advs.

HON’BLE MR. JUSTICE DINESH KUMAR SHARMA

J U D G M E N T
S. No
Particulars
Page Nos.
A.
Preface
2
B.
Factual Matrix
3-13
C.
Submissions on behalf of Petitioner
13-29
D.
Submissions on behalf of the MIAL
29-33
E.
Finding and Analysis
34-67

DINESH KUMAR SHARMA,J :
(A) PREFACE:
1. The present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘Act’) challenging the impugned arbitral award dated 21.12.2023 as corrected under Section 33 of the Act vide order dated 16.01.2024.
2. Airport Authority of India (hereinafter referred to as ‘AAI’ or ‘Petitioner’) is a statutory authority established under the Airports Authority of India Act, 1994, responsible for maintaining and managing civil aviation infrastructure in India.
3. Mumbai International Airport Limited (hereinafter referred to as ‘MIAL’ or ‘Respondent No.1’) is a joint venture entity entrusted with the operation, management, and development of Chhatrapati Shivaji Maharaj International Airport, Mumbai (‘CSMIA’) under an Operation Management and Development Agreement (hereinafter referred to as ‘OMDA’) dated 04.04.2006 executed between AAI and MIAL.
4. State Bank of India, (hereinafter referred to as ‘SBI’ or ‘Respondent No.2’) a public sector bank and the designated escrow agent under the Escrow Agreement executed as part of the financial arrangement governing the OMDA.

(B) FACTUAL MATRIX:
5. Briefly stated the factual matrix of the case as stated in the present petition is that in March 2020, upon the outbreak of the COVID-19 pandemic and subsequent governmental restrictions aviation operations were severely disrupted. Consequently, MIAL issued a Force Majeure notice on 17.03.2020 under Article 16 of the OMDA, claiming that the pandemic constituted a Force Majeure event from 13.03.2020. MIAL sought suspension of its Annual Fee (‘AF’) obligations, citing an adverse financial impact. The said notice was responded by AAI on 24.03.2020, requesting MIAL to provide a Business Plan reflecting the financial impact of the pandemic. On the same day, MIAL requested AAI to instruct SBI within 24 hours to halt transfers from the Proceeds Account to the AAI Fee Account and instead transfer funds to the Surplus Account for operational expenses. AAI, in its reply dated 25.03.2020, pointed out that MIAL’s request for a 24-hour response was inconsistent with the 15-day response period stipulated in the OMDA and sought financial records to substantiate MIAL’s force majeure claims.
6. On 26.03.2020, MIAL submitted financial statements showing its fund position and urgent pending payments but failed to provide supporting audited records. AAI, upon review, noted that INR 65 crores allocated for debt servicing was unnecessary due to the Reserve Bank of India’s loan moratorium and concluded that MIAL had sufficient financial capacity to meet its obligations.
7. On 30.03.2020, MIAL’s Board of Directors unilaterally declared COVID-19 a Force Majeure event without conducting a financial impact assessment. On the same day, AAI formally disputed MIAL’s Force Majeure claim but, as a goodwill gesture, permitted deferment of the Monthly Annual Fee payments for April–June 2020, requiring the deferred amounts to be paid by 15.07.2020. AAI also instructed SBI to transfer INR 82 crores from the AAI Fee Account to the Surplus Account to aid MIAL in meeting operational costs.
8. On 17.04.2020, MIAL reiterated its position, contending that its obligation to pay the Annual Fee should be suspended. AAI, in its reply dated 30.04.2020, refuted this assertion, emphasizing that an obligation capable of being performed could not be suspended under Chapter XVI of the OMDA. AAI rejected MIAL’s interpretation that payment obligations should remain suspended until pre-pandemic revenue levels were restored.
9. MIAL subsequently initiated arbitration against AAI, leading to the constitution of the learned Arbitral Tribunal (hereinafter referred to as ‘AT’) on 17.12.2020. Prior to the constitution of the learned AT, on 09.07.2020, MIAL filed a petition under Section 9 of the Act before the Delhi High Court, seeking to restrain AAI from accessing funds in the Escrow Account. The Court, vide order dated 27.11.2020, directed that 38.7% of MIAL’s revenue be deposited in the Escrow Account but did not issue any directives regarding past dues. This order was later modified by the Division Bench on 14.01.2021, requiring MIAL to maintain INR 153 crores in an interest-bearing account with SBI to secure AAI’s claim for unpaid dues.
10. MIAL filed its Statement of Claim on 01.03.2021 and on the same day it communicated to AAI that the Force Majeure event had ceased. AAI filed its Statement of Defence and Counterclaims on 15.06.2021, and MIAL filed its response to AAI’s Counterclaims on 05.08.2021.
11. During the arbitration proceedings, both parties filed applications under Section 17 of the Act and learned AT vide order dated 28.06.2021, partially allowed MIAL’s application while rejecting the application u/s 17 of the Act filed by AAI, directing that while MIAL was to set aside AAI’s revenue share, AAI was restricted from utilizing the funds.
12. Through a Procedural Order dated 09.08.2021, the learned AT framed the following issues for determination:
(i) Whether MIAL was entitled to the claims and reliefs sought in the proceedings.
(ii) Whether AAI, as the respondent and counterclaimant, was entitled to the counterclaims and reliefs sought.
(iii) Whether either or both parties were entitled to interest on their claims, and if so, for what period and at what rate.
(iv) Whether either or both parties were entitled to costs on their respective claims, and if so, for what amounts.
13. Final arguments were heard in November 2022 and the learned AT reserved its award 18.01.2023. An extension for the mandate of the learned AT under Section 29A(3) of the Act was sought and granted until 31.08.2023. Subsequently, another extension was granted on 24.08.2023, extending the mandate until 01.12.2023.
14. Learned AT delivered the arbitral award on 21.12.2023, which was formally pronounced on 06.01.2024 and thereafter vide order dated 16.01.2024, the learned AT passed an Order under Section 33 of the Act suo motu correcting the “stenographical errors” in the Impugned Award dated 21.12.2023.
15. In the above background, the petitioner has sought to assail the impugned arbitral award on the grounds that it conflicts with the public policy of India, violates fundamental principles of justice and morality, and suffers from patent illegality. The grounds for challenge as stated in the petition are as follows:
a. Learned AT ignored vital evidence on record, including but not limited to relevant documentary and oral evidence particularly the extensive evidence demonstrating MIAL’s ability to pay the AF, relying on MIAL’s own documents and oral evidence. Learned AT disregarded the entirety of this evidence, which forms no part of the impugned award.
b. Learned AT has not only rewritten the contract, but has also rendered certain contractual provisions ineffective. The impugned award nullifies Articles 16.1.1 and 16.1.2(e) of the OMDA by removing the requirement of demonstrating ‘inability to perform obligations’ to claim the benefit of Force Majeure. Furthermore, learned AT has not only failed to examine whether the notice was issued in compliance with the provisions of OMDA, but instead has altogether deleted the requirement of a notice under Article 16.1.5(a) of the OMDA. The award effectively deletes this provision by treating the occurrence of a pandemic and government recognition of the same as co-equal to the issuance of a notice by MIAL under Article 16.1.5(a) of the OMDA.
c. The interpretation of the contract contained in the impugned Award is not even a possible view of the contractual terms, which are explicit, unambiguous and irreconcilable. Learned AT rejected the submission of AAI that since AF is calculated as a percentage of revenue, it remains proportionate to revenue and is always capable of being paid and held that that it would be too simplistic to require MIAL to pay 38.7% of its earnings without considering its obligation to ensure smooth airport operations. It has been stated that the said interpretation of AAI was based on the plain and literal reading of Articles 11 and 16 of the OMDA and the decision of the learned AT is in the teeth of contractual provisions. Further, the learned AT’s finding that the occurrence of a Force Majeure event is indisputable contradicts the express terms of the contract and disregards AAI’s contention that the Covid-19 pandemic alone does not justify relief for MIAL unless all requirements under Chapter XVI are met. While the pandemic qualifies as a physical event under Article 16.1.3(vii), it can only constitute Force Majeure if it satisfies the conditions set forth in Articles 16.1.1 and 16.1.2. MIAL failed to demonstrate its inability to perform a specific obligation, a key requirement under these provisions. By ignoring these contractual conditions and treating the pandemic itself as Force Majeure, the learned AT arrived at a conclusion that no fair or reasonable person could have reached.
d. Learned AT has violated the letter and spirit of Section 28(3) of the Act and effectively rewritten Article 11 which required MIAL to pay 38.71% of its ‘Revenue’ to AAI. The definition of ‘Revenue’ and the language of Article 11 is clear and unambiguous and provides that payment of AF was not contingent on whether MIAL generated profits or incurred losses. The AT has erroneously converted the revenue-sharing mechanism contemplated under the OMDA into a profit-sharing contract by holding that, during the Force Majeure period, revenue receipts would first be used for running the airport, and only the surplus, if any, would be shared between MIAL and AAI in the contractual ratio
e. The impugned award has rewritten Chapters XVI and XVIII of the OMDA by allowing an extension of the OMDA term for a period commensurate to 13.03.2020 till 28.02.2022. Even assuming, on a demurrer, that MIAL was entitled to the benefit of the Force Majeure clause, the relief of extension of the contract term finds no mention in the Force Majeure clause itself. There is no contractual basis whatsoever for extending the concession period, and the award provides no reasoning for granting such an extension.
f. Impugned Award contravenes Section 31(3) of the Act as it fails to provide reasoning for its findings and leaves key issues unresolved. A crucial question—whether MIAL was genuinely unable to pay the Annual Fee—remains unaddressed. Furthermore, the learned AT failed to determine whether each installment of the Annual Fee is a separate and distinct obligation, which, if unpaid on time, would attract interest under Article 11.1.2.2. Learned AT also did not assess whether all conditions under Article 16.1.2 were met at the time each installment became due. Additionally, the Impugned Award provides no rationale for excusing rather than suspending MIAL’s obligation to pay the Annual Fee, despite explicitly raising the question in the award itself. Another core issue left unresolved is what constitutes pre-Covid levels of activity. It has been stated that while the learned AT rejected MIAL’s argument that Air Traffic Movement (‘ATM’) and Passenger Traffic Movement (‘PTM’) should define pre-Covid levels of activity, it failed to provide a clear alternative standard. Factors such as government-imposed Covid-19 restrictions and MIAL’s alleged negative cash flow are discussed but not linked to determining pre-Covid activity levels. Learned AT arbitrarily set 28.02.2022 as the end date for relief based on the Supreme Court’s order extending limitation under general and special laws.
g. Impugned Award has altered the very basis on which bids were invited inasmuch as it alters the ‘key features of the transaction”’ as recorded in the Judgment of the Supreme Court in Reliance Airport Developers (P) Ltd. v Airports Authority of India & Ors., (2006) 10 SCC 1 by allowing MIAL to be completely excused from making payment of AF for the period 13.03.2020 to 28.02.2022, the only consideration behind the successful bid and also by extending the term of the contract which was proposed to be and finally was, a period of 3 0 years ( extendable for another 30 years at the option of MIAL).
h. Impugned Award altered the waterfall mechanism established in the Escrow Account Agreement dated 18.04.2018. Under the Escrow Account Agreement, the Escrow Bank was required to prioritize deposits as follows: first, statutory dues; second, the monthly AAI Fee; and third, any remaining balance into the Surplus Account. This structure clearly established that MIAL’s obligation to pay the MAF to AAI took precedence over its operational expenses, except for statutory dues. Learned AT, however, held that during the Force Majeure period, revenue receipts should first be used for airport operations, with only any surplus to be shared between MIAL and AAI, thereby overturning the agreed-upon financial structure.
i. Learned AT rendered that since force majeure steps in only upon the occurrence of an unforeseen event caused by a superior or irresistible force, an act of God, or an event entirely beyond human control (as opposed to a third-party event) and thus cannot be covered under Section 32contradicts the public policy of India as the said interpretation conflicts with settled law, as established in Associate Builders v. DDA, (2015) 3 SCC 49 (paras 18 and 27) and reaffirmed in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131. It has been stated that learned AT disregarded the binding judicial precedents—despite being made aware of them
j. Learned AT has granted MIAL relief in excess of what it sought in its letter dated 17.03.2020. MIAL only sought suspension of its obligation to pay MAF but learned AT granted complete excusal from making payment of AF for the period 13.03.2020 to28.02.2022 and also extended the term of the OMDA by a commensurate period. Learned AT failed to address AAI’s objection that suspension or excusal of obligations applied only to those arising during the Force Majeure event which MIAL itself claimed ended on 11.03.2021, and that only the time for performing such obligations can be extended. Article 16.1.5(c) does not determine the right to excusal or suspension of obligations, which is governed by Articles 16.1.1 to 16.1.3, nor does it prescribe what relief can be granted under Chapter XVI. It has been stated that Article 16.1.5(c) applies only when obligations are suspended—not excused entirely as evident from the plain and ordinary meaning of the contract’s terms, and any other view contradicts its clear and unambiguous language.
k. The allocation of Rs. 6.58 Cr. in costs to MIAL is patently illegal and lacks justification under Indian law. The award on interest is also unreasoned, patently illegal, and against the fundamental policy of Indian law.
l. AAI admitted the occurrence of Force Majeure in its letter dated 30.03.2020 is factually incorrect and contrary to the record. The letter, issued under Article 16.1.5(d) of the OMDA, explicitly disputed MIAL’s claim that no Annual Fee was payable due to Force Majeure. While AAI, acting in good faith, granted MIAL an extension until 30.06.2020 to submit its Annual Business Plan—given the difficulties cited due to the lockdown and this was a one-time dispensation and not a recognition of Force Majeure. Since the Business Plan determines the Annual Fee payable in monthly installments (MAF), AAI deferred MIAL’s MAF payments for April–June 2020 until 15.07.2020, without interest, to align with the revised timeline. However, this was purely a procedural accommodation, not an acknowledgment of Force Majeure. The letter expressly rejected MIAL’s entitlement under Chapter XVI of the OMDA, and the Tribunal’s conclusion that it amounted to an admission is legally untenable and a patently erroneous finding that no fair-minded arbitrator could have reached.
16. It has further been stated in the petition that the Impugned Award warrants interference on two more counts. First, the learned AT’s reliance on AAI granting relief to its own concessionaires to justify relief for MIAL is patently illegal and has no contractual basis under the OMDA. It has been stated that the learned AT ignored key evidence that MIAL itself did not extend revenue share relief to its own concessionaires at Mumbai Airport. Furthermore, AAI’s argument that MIAL’s claim was not contractual but premised on public law grounds beyond the jurisdiction was not even considered. The learned AT erroneously equated MIAL, an airport operator, with small retail concessionaires (such as cafés) at AAI-run airports, despite the fundamental difference in their roles. It has been stated that MIAL holds an exclusive right to operate Mumbai’s only airport, with its primary financial obligation being the payment of the AF, whereas AAI’s concessionaires operate individual shops without comparable obligations. Notably, AAI never excused or suspended revenue share payments for its own concessionaires, making the learned AT’s conclusion factually and legally flawed. Additionally, it has been stated the Impugned Award’s reasoning is extra-contractual, relying on AAI’s treatment of other agreements rather than the specific terms of the OMDA, rendering it liable for setting aside under Section 34(2)(A) of the Act. It has also been stated that the learned AT wrongly claimed that AAI ignored the term “excuse,” despite AAI’s written submissions addressing this distinction extensively. Furthermore, the finding that the contract would have become void “but for” the Force Majeure clause is entirely unsupported by evidence and overlooks the necessity of proving an actual inability to perform.
(C) SUBMISSIONS ON BEHALF OF THE PETITIONER:
17. Sh. Tushar Mehta, learned Solicitor General of India submitted that the impugned award is liable to be set aside as it is perverse, contrary to law, and fundamentally alters the contractual framework between the parties. It was submitted that an arbitral Award is liable to be set aside, if the arbitrator construes the contract in a manner that no fair-minded or reasonable person would, and the arbitrator’s view is not even a possible view, or if the award wanders outside the contract. It has been submitted that the contract, which is the culmination of the parties’ agency, is to be given full effect, and no provision thereof can be frustrated or rendered otiose. It has been submitted that an arbitral award can also be set aside if the award is (i) unreasoned, in contravention of Section 31(3) of the Act; (ii) perverse and, hence, patently illegal; (iii) contrary to the fundamental policy of Indian law, inter alia for the reason that it disregards judgments/orders passed by superior courts. Reliance has been placed on Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131to emphasize that if an arbitrator gives no reason for an award, it contravenes Section 31(3) of the 1996 Act that would certainly amount to patent illegality on the face of the award. It was submitted that though perversity may no longer be a ground for challenge “under public policy of India” it would certainly amount to patent illegality appearing on the face of the award.
18. Learned SG has also relied on the judgment in DMRC Ltd. v. Delhi Airport Metro Express Pvt. Ltd., 2024 INSC 292 to emphasize that in a similar case involving public funds, the Apex Court approved the exercise of power under Section 34 to set aside an Award holding it to be perverse and resulting in a miscarriage of justice, on the ground that the Tribunal adopted an “unreasonable” and “uncalled for interpretation” of the contract which frustrated the relevant contractual provision(s). Learned SG submitted that in DMRC Ltd. v. Delhi Airport Metro Express Pvt. Ltd.,(Supra) reliance was placed upon Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (Supra) wherein it was inter alia held that though construction of the terms of a contract is primarily for an arbitrator to decide. However, if the arbitrator construed a contract in a manner that no fair minded or reasonable person would or that the arbitrator’s view is not even a possible view to take or if the arbitrator wanders outside the contract and deals with the matter not allotted to him, the arbitrator commits an error of jurisdiction. Learned SG submitted that this ground of challenge now falls within the new ground added under Section 34(2)(A) of the Act. It was submitted that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be “perverse” and liable to be set aside on the ground of “Patent Illegality”.
19. Learned SG has also relied upon Energy Watchdog v. CERC, (2017) 14 SCC 80 in which reliance was placed upon Alopi Parshad & Sons Ltd. v. Union of India, (1960) 2 SCR 793 : AIR 1960 SC 588 wherein it was inter alia held that the performance of a contract is never discharged merely because it may become onerous to one of the parties. In Energy Watchdog (Supra) reliance was also placed upon Naihati Jute Mills Ltd. v. Khyaliram Jagannath, (1968) 1 SCR 821: AIR 1968 SC 522, wherein it was inter alia held that a contract is not frustrated merely because the circumstances in which it was made are altered. It was further inter alia held that the courts have no general power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events.
20. Similarly, in Energy Watchdog (Supra) reliance was also placed upon Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH (1961) 2 WLR 633 wherein the House of Lords inter alia held that even though the contract had become more onerous to perform, it was not fundamentally altered. It was further inter alia held that where performance is otherwise possible, a mere rise in freight price would not allow one of the parties to say that the contract was discharged by impossibility of performance.
21. Learned SG has also placed reliance upon NTPC Limited v Jindal ITF Limited & Anr.2025 SCC OnLine Del 511 wherein it was inter alia held that despite the minimum judicial interference, the Court would not mechanically uphold the award of the learned AT without examining the same on the anvil of the settled judicial principles and principles of natural jurisdiction. In this case, it was inter alia held that the legislature may have circumscribed the jurisdiction of the Court but still it has bestowed a duty upon the Court to examine the same within a limited sphere
22. Learned SG has submitted that the Force Majeure clause in the OMDA, i.e., Chapter XVI is a self-contained code governing ‘Force Majeure’ which provides conditions that must be satisfied for an event to qualify as an event of ‘Force Majeure’ within the meaning of the OMDA for the benefit of suspension/excusal to be availed. Learned SG has taken this court through the Scheme of Chapter XVI of the OMDA and submitted that Article 16 of the OMDA requires that the party claiming the benefit of the Force Majeure provision can seek suspension/excusal of the relevant contractual obligation “to the extent that” it is “unable to render such performance”. It was submitted that in any case “Force Majeure” is not an admitted position, while the pandemic is covered as one of the physical events set out in Clause 16.1.3, however, as per the same clause, it is evident that the pandemic would qualify as Force Majeure only “to the extent that they, or their consequences satisfy the requirements set forth in Article 16.1.1 and Article 16.1.2”, i.e., inability is a sine qua non for an event described in Article 16.1.3 to constitute “Force Majeure” under the OMDA and thereby avail the benefit of Chapter XVI.
23. Learned SG has submitted that in the present case, MIAL has not been able to prove that it was “unable” to pay the AF from 13.03.2020 onwards. It has been submitted that MIAL was undisputedly able to (and in fact did) render performance of all its obligations under the OMDA, including the obligation to share 38.7% of its revenue with AAI. It has been submitted that from 13.03.2020 to 28.02.2022, MIAL substantially paid AAI its share of revenue or kept AAI’s share aside throughout the relevant period. It has been submitted that on July 7, 2020 where MIAL transferred INR 29.07 crores from the Proceeds Account to the AAI Fee Account as payment for the Monthly Annual Fee (‘MAF’) for July 2020. Shortly, thereafter on July 9, 2020, MIAL filed an application under Section 9 of the Arbitration Act seeking to restrain further transfers from the Proceeds Account to the AAI Fee Account. On July 15, 2020, the learned Single Judge of this court directed that the “money in the Escrow Account” remain in status quo until the conclusion of arguments the following day, a directive that remained in place until November 27, 2020. Later, on January 14, 2021, the Division Bench of this Court ordered MIAL to maintain a balance of INR 153 crores in a separate interest-bearing account with SBI to secure AAI’s claims regarding pending AF for the period between April and November 2020. Finally, on March 11, 2021, MIAL wrote to AAI, acknowledging that the Force Majeure event had ceased. Notably, it has been submitted that this letter was issued just two days before the expiration of the one-year period stipulated in Article 16.1.7 of the OMDA, upon which AAI would have been entitled to terminate the OMDA.
24. Learned SG has submitted that despite being able to pay the Annual Fee, MIAL, in its Statement of Claim, sought excusal from payment of the Annual Fee from March 13, 2020, “till such time period the Claimant achieves the level of activity prevailing before occurrence of Force Majeure.” Additionally, MIAL sought an extension of the Term of the OMDA for a commensurating period. Significantly, these reliefs were sought without a single pleading in the Statement of Claim asserting that MIAL was “unable” to pay the Annual Fee, as required under Chapter XVI of the OMDA.
25. Learned SG has submitted that even in its Reply, MIAL itself candidly admitted that it had been “constantly making” payments of the Annual Fee. MIAL contended that it was not required to demonstrate such inability to claim the benefit of Chapter XVI—an argument that directly contradicts the requirement under Article 16.1.1 to demonstrate an inability to perform the obligation in question. Learned SG emphasized that when a party has in fact been able to perform its obligations, it cannot claim an inability to do so or seek an excuse from performance.
26. Learned SG further submitted that on March 17, 2020, MIAL had invoked the Force Majeure clause seeking ‘suspension’ and not ‘excusal’ of payment of the Annual Fee with effect from March 13, 2020. However, it has been submitted that MIAL’s notice neither stated nor demonstrated that it was “unable” to fulfill this obligation, thereby failing to comply with the requirements of Article 16.1.5(a), which mandates that a notice must include details regarding the “manner in which the Force Majeure event(s) affect the Party’s obligation(s).” Additionally, it has been submitted that Learned AT erroneously granted MIAL excusal from obligations arising after March 11, 2021, the date on which MIAL itself acknowledged that the Force Majeure event had ceased. Thus, it has been submitted that since necessary preconditions under Chapter XVI of the OMDA were not satisfied, and therefore, MIAL was not entitled to any relief under the Force Majeure provisions.
27. Learned SG submitted that in addition, the Impugned Award not only holds that MIAL is excused from making any payment of the Annual Fee to AAI during the period 13.03.2020 to 28.02.2022, but it also holds that MIAL is entitled to an extension of the very Term of the OMDA for a commensurating period, despite the fact that, no clause in the OMDA, including the Force Majeure clause, contemplates such relief and, further that no such relief was sought at the relevant time by MIAL while purportedly invoking Article 16 of the OMDA. It has been submitted that MIAL has been granted a “double dip” of both excusal of its obligation to pay the Annual Fee and also an extension of the term of the OMDA and has been unjustly enriched at the cost of public monies.
28. Learned SG submitted that the learned AT has rewritten the Contract between the parties and rendered otiose certain key provisions thereof. It has been submitted that MIAL’s case was that Article 16 of the OMDA provided for suspension/excusal of MIAL’s obligation to pay the Annual Fee to AAI under Article 11 in the event the revenues received by MIAL during the corresponding period were insufficient to operate and manage the Airport. It has been submitted that nothing in the language of either Article 16 or Article 11 contains such a stipulation. It has been submitted that without explicitly giving expression to the term it was implying in the OMDA, the learned AT at para 105 concludes that during the so-called force majeure period, revenue receipts would have to be used “firstly for running the Airport, and in the event that there is a surplus thereafter, the surplus would have to be share”. It has been submitted that this stipulation finds no place in the OMDA, but has been written into the contract by the Award.
29. Learned SG has submitted that an essential contractual precondition, i.e., that a party must be unable to perform a particular contractual obligation in order to claim the benefit of the force majeure provision, has been written out of existence by the Tribunal. It has been submitted that since MIAL actually paid/kept aside the Annual Fee, MIAL cannot possibly be said to be “unable” to perform its obligation under Chapter XI of the OMDA. Therefore, the decision to order a refund of amounts paid over by MIAL to AAI is a patently illegal conclusion.
30. Learned SG has submitted that learned AT has also inserted a provision on extension of the term of the OMDA. It has been submitted that no provision of the contract, either in Chapter XVI or XVIII or otherwise, contemplates the extension of the Term of the OMDA on account of force majeure events. It has been submitted that in its letter dated March 17, 2020, MIAL did not seek such an extension, and during the arbitration proceedings, in the course of its oral submission, MIAL expressly admitted that there was no contractual basis for this relief, instead relied on the principles of “economic justice” for seeking the relief of such extension. It has been submitted that the Impugned Award does not examine or address these fundamental arguments, nor does it engage with the admission. It has been submitted that Ld. AT ignored the AAI’s explicit contention that “the Claimant candidly admitted in the course of its submissions that there was no contractual basis for the aforesaid claim and that it relied on the principles of ‘economic justice’,” a position that MIAL has never denied. It has further been submitted that the learned AT summarily granted the relief of extension in a single paragraph, without substantive reasoning or contractual justification, thereby effectively rewriting the contract by altering the Term of the OMDA (Chapter XVIII), expanding the relief under the force majeure clause beyond what is permitted (Chapter XVI) and changing the basis on which bids were invited. It has been submitted that the learned AT erroneously inserted a provision for extension that does not exist in the contract.
31. Learned SG has submitted that learned AT’s justification, as set out in paragraph 117 of the Impugned Award, is legally unsustainable and unreasoned, as it asserts that “in several contracts where the tenure spans a long term, alleviation/relief is accommodated by extending the tenure of the contract” without citing any legal authority, contractual provision, or factual basis. It has been submitted that learned AT misinterprets Article 16.1.5(c), which does not contemplate an extension of the Term and misconstrues AAI’s letter dated March 30, 2020, which merely indicated AAI’s willingness to extend the time for performance of an obligation (i.e., payment of the Monthly Annual Fee), not the Term of the OMDA itself. It has been submitted that the extension of the Term effectively grants MIAL an undue advantage by allowing it to benefit from the Force Majeure clause twice—first, through the excusal of the Annual Fee payments from March 13, 2020, to February 28, 2022, and second, by obtaining an approximately two-year extension of the contract—resulting in an unjust financial benefit for MIAL at the expense of public revenue.
32. Learned SG has submitted that learned AT has converted the OMDA into a Profit-Sharing Contract. It has been submitted that under the OMDA, MIAL shares 38.7% of its Revenue with AAI, and the said obligation to pay the Annual Fee is not contingent on MIAL being able to meet its operational costs or establishing that MIAL is encountering negative cash flow. It has been submitted that at paragraph 105 of the Award, the learned AT has converted the revenue-sharing mechanism contemplated under the OMDA into a profit-sharing contract by holding that, during the force majeure period, “the revenue receipts/collections would have to be used firstly for running the Airport, and only in the event that there is a surplus thereafter, the surplus would have to be shared…” Learned SG has submitted that this finding rewrites the OMDA and also has an effect of rewriting the Priority Cash-flow Application provided in clause 3.2(B) of the Escrow Account Agreement, wherein payment of AAI Fee is given precedence over meeting of MIAL’s operational and other expenditure.
33. Learned SG submitted that the Impugned Award is unreasoned and perverse on multiple key issues. At paragraph 31, learned AT stated that the transpiration of a force majeure event is beyond cavil or disputation, thereby rendering otiose any notice as envisaged in Article 16.1.5 of the OMDA. It has been submitted that this observation by the learned AT effectively negates the contractual requirement of demonstrating an inability to perform obligations before invoking Force Majeure, thereby bypassing a fundamental prerequisite under the contract. It has been submitted that the learned AT fails to undertake any analysis of whether MIAL was actually unable to pay the Annual Fee which is a critical issue for determining the validity of its claim under Chapter XVI of the OMDA. Further, it has been submitted that at paragraph 93, the Tribunal holds that it was unnecessary for it to return an opinion on the question whether OMDA envisions either revenue sharing or profit sharing, despite AAI specifically arguing that acceptance of MIAL’s claims would fundamentally alter the contractual framework. Learned SG has submitted that this failure to engage with AAI’s argument undermines the reasoning of the Award. Additionally, it has been submitted that the Award is plainly perverse and internally contradictory as at paragraph 65, the learned AT recorded that MIAL conceded that all conditions under Article 16.1.2 must be satisfied in order to claim relief under Chapter XVI, yet at paragraph 67, it has been stated that MIAL argued that Chapter XVI does not require proof of inability to pay. Learned SG has submitted that this contradiction further underscores the perverse nature of the Award, as it fails to provide a consistent and reasoned approach to the interpretation of the contractual provisions.
34. Learned SG has submitted that the impugned award is contrary to the public policy. It has been submitted that at paragraph 83, the learned AT held that Section 32 of the Indian Contract Act would only be attracted if the contingency of the outbreak of COVID or any other closely similar contagion had specifically been postulated and dealt with in the contract. However, it has been submitted that this statement disregards the binding effect of Energy Watchdog v. CERC, (2017) 14 SCC 80, which clearly holds that Section 32 of the Indian Contract Act applies when a contract contains a force majeure clause, whereas Section 56 applies when there is no such provision.
35. Learned SG has submitted that the fact that MIAL’s revenues are said to have dropped during the relevant period is not sufficient to avail the benefit of Chapter XVI. To avail the benefit of Chapter XVI, all conditions of Article 16.1.2 have to be satisfied. This is evident from the plain language of Article 16.1.2 as has also been held in the Impugned Award. This is also in accord with Article 16.1.3 which specifies that a physical event (such as the pandemic in the present) only constitutes “Force Majeure” if it also satisfies the requirements of Articles 16.1.1 and 16.1.2. Learned SG has submitted that the alleged temporary negative cash flow of MIAL only satisfies the requirement of Article 16.1.2(a) but not the requirement of Article 16.1.2(e) and Article 16.1.1, i.e., the requirement to prove inability. It has been submitted notwithstanding above and assuming that MIAL suffered a temporary negative cash flow and that such temporary negative cash flow “materially and adversely affects the performance of an obligation”, even in that case this in itself is not sufficient to claim the benefit of Chapter XVI without MIAL also proving that it was “unable to render such performance by an event of Force Majeure”. In view of the decision of Supreme Court in Energy Watchdog v. CERC, (2017) 14 SCC 80, it has been submitted that a party is not discharged from its contractual obligations even if performance of the same has become more onerous. It has been submitted that it is not sufficient for MIAL to say that if its revenues drop, the provisions of Chapter XVI automatically trigger. The test is inability or impossibility to perform the obligation, i.e., inability to pay AAI its share of the Revenue and as stated previously, it has been submitted that this test is not satisfied, and, on the contrary, MIAL has in fact discharged its obligation by keeping aside / paying over AAI’s share of Revenue while continuing to operate and maintain the Mumbai Airport. Thus, it has been submitted that the Impugned Award has substituted the contract between the parties with one of its own making inter alia by writing Clauses 16.1.1 and 16.1.2(e) out of existence, in an attempt to provide some basis for the grant of relief to MIAL.
36. Learned SG has submitted that the grant of relief until 28.02.2022 is unreasoned. It has been submitted that MIAL’s reliance on Article 16.1.5(c) of the OMDA is misplaced and contrary to the meaning of the said provision. It has been submitted that a bare perusal of Article 16.1.5(c) makes it clear that the provision allows for the “The time for performance” to be “extended by the period during which such Force Majeure continues and by such additional period thereafter as is necessary to enable the affected Party to achieve the level of activity prevailing before the event of Force Majeure.” Therefore, Article 16.1.5(c) only provides for the period that a suspension could operate. Such a stipulation, it has been submitted, is not relevant to a whatsoever to “excusal” (which is the relief that has been granted in the Impugned Award). If an obligation has been excused, there is no question of extending the time for performance of the same. Further, learned SG has submitted that without prejudice to the above, and assuming (without conceding) the said Article has any relevance in this context, it has been submitted that Article 16.1.5(c) only allows for a time extension to perform those obligations that were affected during force majeure. It does not wipe out contractual obligations that arose for the very first time after the period of force majeure ceased to exist. It has been submitted that even according to MIAL itself, the force majeure event ceased on 11.03.2021, thus, no obligation that arose after 11.03.2021 could have been suspended by having recourse to Article 16.1.5(c). Be that as it may, it has been submitted that the learned AT has erred in not determining what is the “additional period thereafter as is necessary to enable the affected Party to achieve the level of activity prevailing before the event of Force Majeure”. It has beens submitted that the sole basis on which MIAL has been granted relief till 28.02.2022 is the Supreme Court’s Order extending limitation. However, it has been submitted that MIAL did not even attempt to justify this reasoning or even suggest that the Order of the Supreme Court extending the statutory period of limitation under several laws has any relevance to the purely contractual issue of relief being claimed under a Force Majeure clause.
37. Learned SG has submitted that the Supreme Court’s Order extending limitation has nothing to do with contractual force majeure generally or specifically under OMDA. It has submitted that the same has no relevance to the conditions stipulated in Chapter XVI which an affected party must satisfy in order to claim relief under the said Chapter. Therefore, it has been submitted that the Award is clearly based on guesswork and irrelevant considerations, which contradict the clear and unambiguous terms of the contract.
38. Learned SG has submitted that the submission of MIAL that Article 16.1.5(c) also provides for extension of the Term of the OMDA is incorrect and contrary to the plain language of the contract. It has been submitted that Article 16.1.5(c) only allows for the time for performance of an obligation affected by force majeure to be extended for a specified period within the Term. It does not allow a party to extend the Term of the Contract itself. It has been submitted that Article 16.1.5(c) only entails the “Procedure for Force Majeure” and only defines the period of suspension of performance of an obligation affected by Force Majeure under Article 16.1.1 and has no application to the enjoyment of rights granted to MIAL under the OMDA. If it were the intention of the parties that the force majeure clause would operate to extend the Term of the OMDA, the contract would have said as much. It conspicuously does not do so. It has been submitted that Article 16.1.5(c) does not provide a basis for claiming a relief over and above those contemplated under Article 16.1.1, namely suspension or excuse of MIAL’s obligations under the OMDA. In any case, it has submitted that MIAL’s submission that Article 16.1.5(c) permits the extension of “any right affected” by Force Majeure and therefore the Grant itself is to be extended cannot be accepted for the simple reason that no such reasoning exists in the Award. It has been submitted that the fact that MIAL is relying on reasoning that forms no part of the Award to support the conclusions arrived at therein is sufficient proof that the Award is incapable of being defended. Therefore, it has been submitted that the Tribunal has granted reliefs that find no mention in Chapter XVI or anywhere else in the contract, thereby impermissibly rewriting the very Term of the OMDA under Article 18.1(e).
39. Learned SG has submitted that MIAL’s reliance on the Email dated 30.03.2020 to contend that occurrence of force majeure was an admitted position between the parties is misplaced. It has been submitted that the email dated 30.03.2020 sent by AAI to the Escrow Bank has been written in terms of Paragraph 12 of the Letter dated 30.03.2020 issued by AAI to MIAL. It has been submitted that MIAL purportedly invoked force majeure on 17.03.2020 which was disputed by AAI vide letter dated 30.03.2020 which was specifically issued under Article 16.1.5(d) of the OMDA and specifically stated that AAI did not agree with the assertion of MIAL that no Annual Fee is to be paid due to suspension of obligations of MIAL on account of Force Majeure event. Therefore, it has been submitted that it is clear that AAI has never admitted to the occurrence of force majeure. However, on a without prejudice basis, it has been submitted that AAI offered a three month deferral to MIAL keeping in view MIAL’s stated difficulty in preparing its Business Plan for the Financial Year (which forms the basis of the computation and payment of Annual Fee for the Year and is ordinarily submitted at the beginning of the Financial Year) in view of Covid-19 related restrictions on movement. It has been submitted that AAI also in the said letter informed MIAL that it shall issue necessary instructions State Bank of India which were issued vide subsequent Email dated 30.03.2020 that has been relied upon by MIAL. Therefore, it is has been submitted that it is beyond the pale of doubt that AAI had always disputed the existence of force majeure from the very beginning and duly followed the procedure under the contract for disputing such force majeure notices.
(D) SUBMISSION ON BEHALF OF THE MIAL:
40. Per Contra, Sh. Rajiv Nayar, learned senior counsel for MIAL has submitted that the learned AT has rendered the award based on a thorough appreciation of evidence. It has been submitted that the grounds for challenging an arbitral award under Section 34 of the Act are well settled, and the scope of challenge is extremely limited. Reliance has been placed on Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49; SsangYong Engineering and Construction Company Limited v. NHAI, (2019) 15 SCC 131.
41. Learned Senior Counsel submitted that, while exercising jurisdiction under Section 34 of the Act, courts should refrain from interfering with an arbitral award merely due to an erroneous application of law or by re-appreciating evidence. It has been submitted that the court does not sit in appeal over the arbitral award, and its interference does not entail a review of the merits of the dispute. Moreover, it has been submitted that only an arbitrator’s view which is impossible can be interfered with by courts, whereas a possible view taken on facts must be respected. Reliance has been placed on MMTC Limited v. Vedanta Limited, (2019) 4 SCC 163; Konkan Railway Corporation Ltd. v. Chenab Bridge Project, (2023) 9 SCC 85; and OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions India (P) Ltd., 2024 SCC OnLine SC 2600.
42. Learned Senior Counsel submitted that courts should not interfere with an award merely because an alternative view on facts and interpretation of contract is possible. It has been submitted that if the arbitrator’s interpretation is plausible, it cannot be subjected to judicial review, even if the contract is capable of two interpretations. It has been submitted that the courts under Section 34 cannot substitute its own view in place of the interpretation accepted by learned AT. Further, even if an arbitral tribunal commits an error in the construction of the contract, such an error falls within its jurisdiction and cannot be a ground for challenge under Section 34. The Court cannot act as an appellate forum over the findings of the tribunal. Reliance has been placed on Kwality Manufacturing Corporation v. Central Warehousing Corporation, (2009) 5 SCC 142; Pure Helium India (P) Limited v. Oil & Natural Gas Commission, (2003) 8 SCC 593; and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran, (2012) 5 SCC 306.
43. Learned Senior Counsel submitted that in the present case, none of the grounds for challenge under Section 34 are available to AAI as all critical facts, events, and evidence are undisputed. It has been submitted that the Learned AT’s interpretation of Chapter XVI of the OMDA, the primary clause under consideration, is both plausible and well-reasoned, having been arrived at after appreciating the evidence on record. It has further been submitted that AAI, in the present petition, has merely reiterated its previous arguments, which have already been duly addressed by the learned AT.
44. Learned Senior Counsel, in respect of the objection of AAI that the interpretation of the OMDA by the Learned AT is erroneous, has submitted that the Learned AT correctly interpreted the clause in question by considering all its terms. It has been submitted that Learned AT rightly rejected AAI’s interpretation, which rendered the word “excuse” otiose and introduced terms like “deferral” that were not present in the clause.
45. Learned Senior Counsel submitted that AAI has not challenged the factual findings of the learned AT. It is an admitted position that COVID-19 is a force majeure event and that a decrease in ATM and PTM adversely affected MIAL’s ability to generate revenue due to the outbreak of COVID-19 which significantly impacted MIAL’s capability to operate the airport, leading to expenses exceeding receipts. Despite this, it has been submitted that MIAL was required to continue airport operations due to its legal obligations under OMDA.
46. Learned Senior Counsel submitted that AAI itself, in its Annual Report for FY 2020-2021, admitted the severe impact of COVID-19 on the aviation sector. It has been submitted that there is essentially no dispute on facts, and since AAI has not challenged the factual findings, they have attained finality. Nonetheless, it has been submitted that findings of such nature cannot be challenged within the limited jurisdiction available under Section 34.
47. Learned Senior Counsel submitted that the Learned AT’s findings on the interpretation of Articles 16.1.1, 16.1.2, and 16.1.5 of the OMDA are correct, reasonable, and based on the evidence and material before it. It has been submitted that COVID-19 was undeniably a force majeure event, as acknowledged by both AAI and the Government of India. Moreover, it has been asserted that AAI itself granted relief to its concessionaires due to COVID-19, which the Learned AT deemed an admission of the occurrence of a force majeure event. Additionally, it has been submitted that MIAL’s financial statements indicated that its total revenue from airport operations was insufficient to meet its operational expenses, thereby demonstrating its inability to discharge its obligations under OMDA. It has been submitted that these financial statements were neither challenged nor questioned by AAI during cross-examination and despite the drastic reduction in aircraft and passenger movement due to various government notifications and circulars restricting air travel, MIAL was legally obligated to incur all costs associated with the maintenance and operation of the airport. It has been submitted that AAI’s contention that MIAL’s continued payment of the Annual Fee negates its claim of “inability” is misplaced. It has been submitted that these payments were made pursuant to the Order dated December 22, 2021, which was based on a Joint Application dated December 13, 2021, explicitly stating that the payments were made without prejudice as a purely interim arrangement.
48. Learned Senior Counsel in respect of the AAI’s argument that the Learned AT has rewritten the OMDA and Escrow Agreement has submitted that the same is misplaced and unfounded. It has been submitted that the award does not alter the OMDA but rather applies the force majeure clause as per the contract. Further, it has also been submitted that AAI’s submission that relief of extension of the term of OMDA amounts to rewriting the contract is erroneous as the Learned AT has rightly relied on Article 16.1.5(c) of the OMDA, which provides a contractual basis for granting the relief of extension. It has been submitted that the Learned AT rightly held that the necessary consequence of a force majeure event was a corresponding extension of OMDA for such a period as the learned AT recognized the force majeure conditions to have existed.
49. Learned Senior Counsel in respect of the AAI’s contention that the email dated 30.03.2020 by AAI to the Escrow Bank did not constitute an admission of force majeure, has submitted that the same is incorrect and an afterthought. It has been submitted that the said email explicitly recorded AAI’s acknowledgment that COVID-19 constituted a force majeure event and deferred the Monthly Annual Fee payments on that basis. Furthermore, it has been submitted that AAI, having chosen not to lead a fact witness before the learned AT to explain away its admission, cannot now dispute the force majeure claim. In light of the foregoing, Learned Senior Counsel has submitted that the challenge under Section 34 is wholly without merit and deserves to be rejected.
(E) FINDING AND ANALYSIS:
50. It is a settled proposition that the Arbitration and Conciliation Act, 1963, as amended up to date, prescribes minimum judicial interference. The Court can interfere under Section 34 of the Act on the limited grounds provided therein. The award can only be interfered with if the Court reaches to the conclusion that the perversity of the award goes to the root of the matter and there is no possibility of alternative interpretation which may sustain the arbitral award. It is no longer res integra that the Court while exercising the jurisdiction under Section 34 cannot clothe itself with an appellate jurisdiction. The Court is bound to respect the finality of the arbitral award. The Act mandates party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. The approach of interfering into the award without there being any ground as prescribed under Section 34 would actually frustrate the commercial wisdom behind opting for alternate dispute resolution. It is also pertinent to mention here that the Court cannot interfere into the award merely on the ground that an alternative view is possible on the facts and interpretations of contract. It is also a settled proposition that the Court should respect the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied. The award can only be interfered if it portrays perversity, unpardonable under Section 34 of the Act. Reliance can be placed upon Dyna Technologies Vs. Crompton Greaves Limited (2019) 20 SCC 1.
51. In Dyna Technologies Vs. Crompton Greaves Limited(Supra), it was inter alia held that while considering the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed i.e.; that the order is (i) proper, (ii) intelligible and (iii) adequate. It was further inter alia held that if the reasonings in the order are improper, they reveal a flaw in the decision making process. The award is also open to challenge on the ground of impropriety or perversity in the reasoning. Similarly, if the award is based on no reasoning at all that would be termed as unintelligible. However, if there is a challenge on adequacy of reasons it was inter alia held in Dyna Technologies Vs. Crompton Greaves Limited(Supra), that the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. It was further inter alia held that the degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. The Apex Court inter alia held that even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the tribunal so that the awards with adequate reasons are not set aside in a casual and cavalier manner. Thus, it was held that the Courts have to be very careful while distinguishing between inadequacy of reasons in an award and unintelligible awards.
52. Bare perusal of this makes it clear that if the award provides no reasoning at all then it falls in the category of unintelligible. Even otherwise it would be hit by Section 31(3) of the Act which provides that the arbitral award must state the reasons upon which the award is based except for the reasons given in the provision itself. It is also pertinent to mention here that the Arbitration and Conciliation Act, 1996 does not provide any qualification for being appointed as an arbitrator. In this regard, Section 11(1) only provides that a person of any nationality may be an arbitrator unless agreed by the parties. Thus, it is not necessary that an arbitrator would be a person from a legal background. Possibly for this reason, the legislature in its wisdom under Section 31(3) of the Act has provided that generally the arbitrator shall state reasons upon which it is based. However, a liberty was given to the parties that they may agree that in the award no reasons are to be given. The award may also not provide any reasons, if the parties have reached on a settlement as provided under Section 30 of the Act. Thus, it seems that for this reason the Apex Court has inter alia held that while entertaining the challenges of an award on the ground of inadequacy of reason the Courts may also consider the documents submitted by the parties and contentions raised before the tribunal. Thus, the Courts while exercising its jurisdiction under Section 34 of the Act may not only look into the award but also look at the pleadings, documents and submissions made by the parties.
53. The Court, in exercising its jurisdiction under Section 34 of the Act to set aside an award, must determine whether the award is so irrational that no reasonable person could have reached the same conclusion. An arbitral award shall fall into the aforesaid category if the findings are based on no evidence; or an Arbitral Tribunal has taken into account something irrelevant to the decision or ignores vital evidence in arriving at its decision. Reliance can be placed upon Associate Builders v. DDA, (2015) 3 SCC 49.
54. In Excise And Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons 1992 Supp (2) SCC 312 it was inter alia held that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law. Similarly, in Kuldeep Singh v. Commr. Of Police (1999) 2 SCC 10 it was inter alia held that if a decision is arrived at on no evidence or evidence which is thoroughly unreliable that no reasonable person would act upon it, the order would be perverse. However, if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.
55. In Rashtriya Ispat Nigam Limited vs Dewan Chandram Saran (Supra) wherein it was inter-alia held that if the terms of a contract are capable of two interpretations and the view taken by the arbitrator is a possible if not a plausible one then it is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. Reliance can also be placed upon SAIL v. Gupta Brother Steel Tubes Ltd. [(2009) 10 SCC 63]. In Sumitomo Heavy Industries Ltd. v. ONGC Ltd.[(2010) 11 SCC 296] it was inter alia held that if the umpire has considered the fact, situation and placed a construction on the clauses of the agreement which according to him was the correct one, one may at the highest say that one would have preferred another construction, but that cannot make the award in any way perverse. It was further inter alia held that in such a situation, the Court cannot substitute its own view in place of the view taken by the arbitrator as it would amount to sitting in appeal.
56. In Kwality Mfg. Corpn. v. Central Warehousing Corpn.[(2009) 5 SCC 142] it was inter alia held that if the umpire is legitimately entitled to take the view, which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement, the same has to be accepted as final and binding.
57. The Court while deciding the petition under Section 34 of the Act and particularly in the dispute arising out of the commercial contract must bear in mind that the parties while entering into the contract, voluntarily agreed to refer their matter for adjudication by an adjudicator chosen and appointed by them. The parties at that stage themselves have excluded their option of going to the Court of Law. The basis genesis of the arbitration, particularly in the commercial dispute is that the arbitrator while deciding such dispute may not clothe himself with a very technical mindset and should decide the dispute between the parties taking in view the commercial sense and the business efficacy.
58. In Mumbai Metropolitan Region Development Authority v. Unity Infraprojects Ltd., 2008 SCC OnLine Bom 190 it was inter-alia held that a business like interpretation of contractual provisions must be adopted in construing contracts entered into by persons of business to govern business dealings. It was further inter alia held that the Court must ensure that interpretation of law in commercial cases must not be disjointed from the intent and object which those having business dealings seek to sub-serve. It was noted that unless interpretation of contracts effectuates a business meaning for persons of business, the law will not fulfill its purpose and object of being a facilitator for business and providing a structure of ordered certainty to those who carry on business here. It is necessary to note that the judicial dispensation system cannot remain static and has to be dynamic and required to innovate constantly itself to keep abreast with rapid changes in business terms.
59. In the present case, AAI which is a statutory authority established under the Airport Authority of India Act, 1994 and the respondents have entered into contract for commercial purposes. It cannot be disputed that the intentions of both parties were to earn revenue out of the joint venture. The joint venture herein was of the development and maintenance of one of the most important and landmark airports of this country, i.e., Mumbai. This Court is of the firm view that the state cannot be denied the commercial gains of profits merely because it has been termed as a welfare state and certain fundamental responsibilities have been placed upon it under the various statutes and the Directive Principles of State Policies. The state would also need the money and the resources for running various welfare projects, and therefore in the commercial disputes, the adjudicator has to maintain the balance between the two. However, the adjudicator must take into account the peculiar facts and circumstances of every case and must assess the same in a very broad horizon. The issue in the present case is that whether during the period of the pandemic, the general provisions of the contract, which mandates the respondent to pay an annual fee at a certain percentage will continue even during the pandemic. It cannot be disputed that during the period of COVID-19, life had come to a standstill. The case of the respondents are that though they continue to run the operation but their revenues had fallen down so much that they were unable to meet even the expenses. On the contrary the case of the petitioner is that; firstly it cannot be said that the respondent were “unable to pay” the fee as the MIAL had in fact substantially paid the fee and thus, was in a position to pay the fee, secondly, the conditions as provided in Article 16 of the OMDA regarding the force majeure never existed in entirety. Learned AT agreed with the contentions of the respondents and passed an award against the petitioner.
60. The question is whether the finding of the arbitrator in such a situation can be considered to be perverse. It is a settled proposition that the interpretation of the contract must be in sync with the test of business efficacy and should be responsive to the facilitation of business. Any interpretation which may generate any sense of uncertainty f